À-la-carte litigation – new options on the menu. Short and Flexible Trials pilot schemes, and the dedicated Financial List

The English High Court recently announced a set of initiatives for the improved management of certain cases in the courts dealing primarily with business disputes: the Chancery Division (incorporating the Companies Court and the Patent Court), the Commercial Court, the Admiralty Court and the Technology and Construction Court.

A Shorter Trials Pilot Scheme will be available for cases which are relatively straightforward and which do not require extensive disclosure or witness evidence. It will not normally be suitable for complex cases or ones including allegations of fraud or dishonesty, or involving multiple parties. Only cases with an estimated hearing length of four days or fewer will be eligible for the scheme. The aim of the shorter trials scheme is to move from issue of proceedings to judgment in under a year, saving all parties considerable time and money. This is to be accomplished by a combination of reducing the time allowed for several stages of the litigation, active case management by a single designated judge and dealing with most interim hearings on paper. Cases will be assigned to the shorter trial procedure if the parties agree or, failing agreement, if the Court so orders.

The High Court will also run a Flexible Trials Pilot. The essence of the flexible trials scheme is to relax trial procedure encompassing disclosure, witness and expert evidence and submissions at trial. Parties will be given latitude (and be encouraged) to agree to more limited disclosure. In addition, it aims to reduce reliance on oral evidence and submissions. To the extent it is possible and agreed by the parties, submissions will be made principally in writing, and oral argument at trial will be subject to a time limit. Oral factual and expert evidence will be limited to identified issues and witnesses. The hope is that disputes will be resolved more quickly and cheaply by limiting the most time-consuming and costly aspects of litigation. The flexible trial procedure will be adopted if the parties agree.

Finally, the Commercial Court, together with the Chancery Division, is proposing the introduction of a new dedicated Financial List. This specialist list would be open for financial disputes (i.e. claims relating to loans, bank guarantees, the financial markets, complex financial products, sovereign debt and capital controls, etc.) worth more than £50 million. Further, Financial List cases would be allocated to specific judges who, in addition to being selected for their considerable experience in financial disputes, would receive regular specialist training. The applicable procedure will be largely that in the Commercial Court guide, so there will be minimal new learning required for those using the Financial List.

It is also proposed to conduct a Financial Markets Test Case Scheme. The intention is to enable parties with opposing interests to seek immediate authoritative English law guidance on financial market issues, even where no actual dispute is before the court.

Each scheme has a different objective in mind, but there are some common threads:

Single designated judges The shorter trials scheme and the dedicated financial list provide for a case to be heard before a single designated or ‘docketed’ judge at all stages, from the first case management conference to enforcement if necessary. Interestingly, each scheme uses designated judges for different reasons. The shorter trials scheme opts for single judges on the basis that familiarity with a case, the issues and the parties, will help a judge to manage a case to trial within the ten-month target.

On the other hand, the financial list proposals opt for designated judges so that the parties are assured of consistent, well-informed handling of any applications or case management decisions. Financial claims are often very document- and data-intensive, and their outcomes can depend, for example, upon obtaining proper disclosure. Accordingly, it can be just as important that case management directions are given by an expert judge, as having the expert judge hear the trial.

The appointment of a designated judge is already available in certain cases in the Commercial Court, but the shorter trials and financial list initiatives represent a significant expansion of the practice and we may see the concept expanded to other disputes in the future. We agree that having designated judges is largely a good thing and is likely at the very least to reduce judicial reading times, while improving judges’ familiarity with cases. If expanded more widely, it could make listing cases more difficult, but for the proposed pilot schemes this should not be a concern.

Limited disclosure The shorter trials scheme and the flexible trials scheme both propose changes to the scope of disclosure. An order for standard disclosure is still made in most cases. Even though a menu of more limited options is now available, parties are often unwilling to agree to limit disclosure for fear of missing a key document. The consultation paper for the shorter and flexible trials schemes notes that, in many cases, standard disclosure leads to considerable costs being incurred and is not necessary to achieve a just outcome.

The shorter trials scheme limits the categories of documents a party will have to disclose:

Documents on which it relies “as supporting [its] case”

Documents “the existence and contents of which they are aware” that are detrimental to its own case, or detrimental to or supportive of the other party’s case

Documents which the other party requested and which it has agreed or been ordered to produce

On the other hand, the flexible trials scheme provides for a party to disclose:

Documents on which it relies

Documents which are “known to be adverse to its case”

Documents requested by the other party

If the parties agree there should be wider disclosure, it should be limited to defined issues

The provisions are similar, but not identical, and there is little clarity on exactly what difference the subtle distinctions are intended to have in practice.

Considering the time and money spent on disclosure in commercial litigation, it is not surprising that the courts are targeting it as a means of controlling costs. Where the facts are straightforward or where any dispute is confined to well-defined issues, this approach is to be commended. However, the tenor of the consultation document and the draft practice direction appears almost to cast disclosure as a ‘bad thing’, to be avoided where possible. In the more complex cases that tend to make their way to these courts, however, it can be a necessary and useful exercise and costs can be controlled by the application of technology.

Open questions The consultation documents are supplemented by draft rules and practice directions which provide some insight into how the schemes will operate, but several questions remain unresolved.

Will the shorter and flexible trials initiatives be subject to a different fee scale?

The significant increases in court fees introduced earlier this year were justified in part by the high costs of managing and administering long disputes. If trials are completed within a year (in the case of the shorter trials scheme), or with largely-agreed procedure and limited disclosure (in the flexible trials scheme), a reduced fee scale should arguably apply. That may also encourage parties to make use of the schemes.

How will the increased flexibility of the flexible trials initiative sit with the court’s approach to compliance with rules and relief from sanctions?

The courts have tended recently to apply rules more strictly than in the past, and been less inclined to grant relief from sanctions. While the harsh line taken in Mitchell v News Group Newspapers has been softened a little by the Court of Appeal in Denton v TH White & Others, it is still clear that parties miss deadlines at their peril. If flexibility, and agreement between the parties on procedure, is key to the flexible trials scheme, how far will that affect the court’s decision-making in case of missed deadlines?

Could any of these schemes affect how contracting parties approach dispute resolution clauses?

Traditionally, the key benefits of arbitration were confidentiality, flexibility of procedure, speed of resolution and, in some cases, lower costs. While arbitration is still good at keeping disputes private, it often takes as long as court proceedings and can be as, if not more, costly. Further, the leniency shown by some tribunals in the face of total disregard for their directions, together with a general unwillingness to make awards on a summary basis or in default, can allow abuses of the arbitration process. If the shorter and/or more flexible trials pilot schemes are successful, contracting parties may decide to eschew arbitration clauses in favour of court jurisdiction in the knowledge that they can submit a dispute to the shorter or flexible trials scheme if suitable.

We will monitor the implementation of the schemes and comment further on their operation, any clarification that is forthcoming and issues that arise.